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Finally: An Unusually Awesome Jobs Report

The economy added 203,000 jobs in November, according to today’s data—and the unemployment rate dipped for the right reasons. There’s just one downside: stubbornly stagnant wages.

We’ve learned at least one thing this fall. The implementation of the Affordable Care Act and the approach of the health insurance mandate isn’t causing companies to fire workers en masse, hold back from hiring, or rush to place employees on part-time status.

Quite the opposite. In the last few months, hiring has been ramping up. On Friday, the Bureau of Labor Statistics reported that the economy added 203,000 payroll jobs in November. The unemployment rate, which is compiled from a separate survey, dipped to 7.0 percent from 7.3 percent in October.

The report contained plenty of good news. With the revisions for the previously reported September and October numbers, the economy has added 816,000 jobs in the past four months, and 2.29 million in the past year. This rate of job growth, an average of 204,000 a month since September—virtually all of it driven by private-sector hiring—has finally become sufficiently strong to drive down the unemployment rate. The labor participation rate and the size of the labor forces both rose in November from October. There was strength across the board, as virtually every major sector—manufacturing, construction, business services, health care, retail—added positions.

Clearly, companies are not holding back on hiring due to regulations, uncertainty, or the rollout of a complicated and confusing new health-care plan. Nor are they reacting to the requirement to offer insurance to employees who work more than 30 hours per week by slashing hours and moving people to part-time status. In fact, in November, the number of people who were working part-time for economic reasons—i.e. they’d prefer to be working full-time but can’t get the hours due to slack demand or employer decisions—fell by 331,000, or 4.1 percent, from October. The total number of people working part-time for economic—7.719 million in November—was off by more than 5 percent from November 2012.

There are a couple of other items worth noting.

A big theme for the last several months has been the end of fiscal austerity. For the last several years, in a trend atypical for expansions, the public sector has been cutting jobs while the private sector has been adding them. That’s why I’ve dubbed this the “conservative recovery.” Between May 2010 and July 2013, government slashed 1.165 million jobs. By contrast, in every month since March 2010, the private sector has added jobs—8.058 million so far. But as states and cities repair their finances, as tax revenues rise across the board, and as the federal government has become less mindless about cutting, the slow bloodletting of public employment seems to have come to an end. Last month, while the federal government cut 7,000 positions, state and local government added a combined 15,000 posts, which means the government sector added 8,000 jobs. State government employment has risen for four straight months, adding 41,000 jobs since July, while local government has added 68,000 jobs in the past year. Overall, these gains are a drop in the bucket and pale in comparison to private sector jobs growth. But they means that one of the big forces that has weighed on the overall job market is lifting.

Alas, while the pace of job creation is picking up, wages still aren’t budging. In a nutshell, companies, which have racked up record levels of profits and are sitting on record amounts of cash, are still being extremely Scrooge-like when it comes to paying their employees. Last month, according to BLS, averagely hourly earnings bumped up by four pennies to $24.15. In the past year, per the BLS, “average hourly earnings have risen by 48 cents, or 2.0 percent.” That’s better than a poke in the eye. But, as has been said in this space a dozen times, if big American companies want to see more robust demand for their goods and services, they’re going to have to loosen the purse strings. Companies are hiring more. Now they just have to a pay a little more.